Growing demand for solar energy makes the localization of PV cells imminent: Local demand for solar power is growing as the government moves forward with its plan to phase out electricity subsidies — which is set to significantly raise the production costs for manufacturers — and the EU pushes its carbon border tax, CBAM, to clamp down on carbon-intensive imports. Both are prompting businesses to accelerate their transition to green energy and creating a need to localize the manufacturing of solar panels, which is yet to overcome a number of hurdles.

More companies are transitioning to green energy: GB Corp unveiled an ambitious plan in 2023 — when it rebranded from GB Auto — to implement solar power plants at all its factories to supply around 40% of their electricity needs by 2024. Stare-run Egyptalum is seeking to implement a 1 GW solar power plant to power its aluminum complex in Qena’s Nagaa Hammadi. In addition, the local bus manufacturer MCV is looking to increase its solar power plant capacity by 7.5 MW, sources in the renewables sector told us.

The manufacturing sector is not the only one in the race: While there is a high demand for solar power projects from energy-intensive sectors such as cement and fertilizer producers, the hospitality sector is also doubling down on increasing its reliance on solar energy, Romany Hakeem, chairman of solar panel installation company BeNeshty Solar and deputy chairman of the Sustainable Energy Development Association (SEDA), told Enterprise.

Fostering the localization of solar panels production would bring down costs: Some 70% of the costs of solar power plants are denominated in USD due to the import of solar panels, Hakeem told us, adding that some of the solar companies have opted to locally assemble solar panels to cut down the installation costs.

A potential export market: The local assembly of solar panels could also open the doors for exports as Hakeem told us that some of the locally-assembled panels are being exported to markets like Morocco.

Incentives to localize solar panels production: Hakeem stressed that the manufacturing of solar panels would greatly benefit from the introduction of incentives by the government especially as it pushes for the implementation of solar power projects. He also called for waiving customs tariffs and VAT on renewables equipment imports — a demand that is often made by renewables industry players (here and here). Moreover, he called for including renewable energy investors in the government’s green hydrogen incentives package, which was ratified by President Abdel Fattah El Sisi earlier this year.

ICYMI: The government launched a website earlier this year to streamline the installation of solar panels for households and companies in a bid to fast-track its goal of increasing the share of renewables in the country’s energy mix as it eyes generating 42% of electricity from renewable sources by 2030.

Dive deeper: We dedicated a Going Green earlier this year to the platform.

Is the gov’t already on track to manufacture solar panels at home? The government plans to build a USD 172 mn factory to produce crystalline silicon — the main component used to manufacture solar panels — as part of the silicon manufacturing complex it is establishing in New Alamein city under a public-private partnership announced last year. The crystalline silicon factory will make use of Egypt’s abundant resources of silica sand, also known as quartz; the silicon dioxide-rich sand is the raw material for producing crystalline silicon.

Gov’t seeks investments in crystalline silicon manufacturing: The government is currently in talks with an international firm to sway it into investing in producing crystalline silicon amid ongoing efforts to attract foreign investments to the industry, a source at the Petroleum Ministry told us.

Lack of investments has pushed Egypt to export its precious quartz: Despite an abundance of silica sand in Egypt, the country has traditionally opted to export the valuable mineral instead of utilizing it in the production of solar panels, as the latter is a costly endeavor that could only be executed via soft development financing or big foreign investments, Ahmed Badra, CEO of renewable energy player Red Sea Green Solutions, told Enterprise.

Ramping up local production to trim imports: The state-owned Arab Organization for Industrialization has solar panel production facilities with a total capacity of 50 MW, which could be gradually increased to catch up with the rising local demand, currently stands at 3 GW, and reduce import bills, Badra told us. He also suggested that the organization could upgrade its production lines to produce higher-output solar panels than the 400-watt panels it currently produces. Egypt usually imports 700-750-watt panels, according to Badra.

Could China help us manufacture solar panels? President Abdel Fattah El Sisi and his Chinese counterpart Xi Jinping discussed potential cooperation in the manufacturing of solar panels and EVs — two products that China is leading the way in terms of affordability and the tech behind them — during El Sisi’s time in China last week.

Your top green economy stories for the week:

  • A EGP 495 mn solid waste treatment plant coming to Giza: The government has signed contracts to build a EGP 495 mn solid waste treatment plant in the Shabramant area in Giza, which will be able to process 640 tons of waste a day. (Statement)
  • Another green methanol facility in the works? ADQ’s AD Ports has inked an MoU with Egyptian shipping giant Transmar and Orascom Construction to explore the possibility of setting up a green methanol storage and export facility targeting maritime transport.
  • Green funding could be coming our way: The EU and Egypt are expected to sign a EUR 35 mn financing agreement next month — part of a wider EUR 7.4 bn package — to fund renewable projects.
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